Rs 5,000 overdraft under Pradhan Mantri Jan-Dhan Yojana is priority sector lending: RBI

MUMBAI: Giving a big boost to Pradhan Mantri Jan-Dhan Yojana (PMJDY), the RBI today said bank overdrafts of up to Rs 5,000 in accounts opened under this financial inclusion mission will be treated as priority sector lending.

"...overdrafts extended by banks up to Rs 5,000 in PMJDY accounts will be eligible for classification under priority sector advances ('others' category) as also weaker sections, provided the borrowers household annual income does not exceed Rs 60,000 for rural areas and Rs 1,20,000 for non-rural areas," the Reserve Bank of India (RBI said in a notification.

Under PMJDY, the overdraft facility is permitted to Aadhaar-enabled accounts after "satisfactory operation" of accounts for six months.

Last August, Prime Minister Narendra Modi had launched the scheme to provide all households across the country access to banking facilities.

As on January 31, more than 12.54 crore accounts were opened the scheme.

Under priority sector lending, RBI ask banks to provide a specified portion of loans to few specific sectors.

Priority sector refers to those sectors of the economy which may not get timely and adequate credit in the absence of the special dispensation.

As per the RBI, these are small value loans to farmers for agriculture and allied activities, micro and small enterprises, poor people for housing, students for education and other low income groups and weaker sections